SJR 7-CONST. AM: STATE TAX; VOTER APPROVAL  1:52:10 PM CHAIR HOLLAND announced the consideration of SENATE JOINT RESOLUTION NO. 7, Proposing amendments to the Constitution of the State of Alaska relating to prohibiting the establishment of a state tax without the approval of the voters of the state; and relating to the initiative process. [This is the third hearing on SJR 7. Previous hearings were held on 4/30/21 and 5/3/21. Public testimony was opened and closed on 4/30/21.] 1:53:01 PM SENATOR MYERS moved to adopt Amendment 1, [work order 32- GS1711\A.1]: 32-GS1711\A.1 Nauman 5/3/21 AMENDMENT 1 OFFERED IN THE SENATE BY SENATOR MYERS TO: SJR 7 Page 1, line 2, following "state;": Insert "requiring a two-thirds vote in each house  of the legislature to change the rate of an existing  state tax;" Page 2, following line 13: Insert a new subsection to read: "(d) Notwithstanding Section 14 of Article II, the rate of an existing state tax may be changed by the legislature only upon affirmative vote of two- thirds of the members of each house of the legislature. Nothing in this subsection alters the ability of the people to change the rate of an existing state tax by initiative or to reject a change in the rate of an existing state tax made by the legislature by referendum." CHAIR HOLLAND objected for discussion purposes. 1:53:06 PM SENATOR MYERS explained Amendment 1 will address a concern that Senator Hughes raised. The public might approve a 2 percent statewide sales tax in one year but the next year the legislature could raise that tax to 10 percent. Since it would not be establishing a new tax, it would not be subject to a vote of the people. He recalled that the City of North Pole initially enacted a sales tax of 3 percent but the tax is now 5 percent. Since it would be cumbersome to go back to the voters each time, Amendment 1 raises a higher bar by requiring a two-thirds vote in each house of the legislature to change the rate of an existing state tax, which he thought was a reasonable compromise. 1:54:44 PM SENATOR KIEHL asked if Amendment 1 was intended to affect the base rates or the effective rates. SENATOR MYERS responded that Amendment 1 would apply to the base rate. He said his point was not to require a two-thirds vote by the legislature unless the base rate of a tax was raised. SENATOR KIEHL recalled that former colleague Representative Gara once introduced a bill to delete the gross value reduction for Alaska's oil taxes. That would not have changed the rate, but the government's share would have significantly increased. He asked if Amendment 1 would require a supermajority or two-thirds vote. SENATOR MYERS said he was unsure. SENATOR KIEHL noted that if an existing tax type had a negative adjustment applied to the basis, it would not change the base rate. Although this would significantly increase the state's take, it would not be impacted by Amendment 1. SENATOR MYERS asked for clarification if he referred to a negative change in the rate. SENATOR KIEHL explained that his scenario relates to a negative change in the basis. He said it would be the same as if the legislature deleted the gross value reduction. Thus, it would increase the value to be taxed by some legislatively determined number, such that it would effectively increase the tax but not touch the rate. 1:56:56 PM SENATOR MYERS asked if this would be similar to property tax exemptions, such that residents can reduce their property tax liability from $20,000 to $10,000. SENATOR KIEHL answered that the scenario he described would effectively change the tax liability for those receiving the tax exemption. SENATOR MYERS responded that the scenario he described would not take a two-thirds vote under Amendment 1. CHAIR HOLLAND removed his objection. There being no further objection, Amendment 1 was adopted. 1:58:08 PM SENATOR MYERS moved to adopt Amendment 2, [work order 32- GS1711\A.2]: 32-GS1711\A.2 Nauman 5/4/21 AMENDMENT 2 OFFERED IN THE SENATE BY SENATOR MYERS TO: SJR 7 Page 2, line 8: Delete "by a majority vote in joint session" SENATOR HOLLAND objected for discussion purposes. 1:58:23 PM SENATOR MYERS explained Amendment 2. If the voters approved a tax through the initiative process, Amendment 2 would require the legislature to approve it by resolution. However, the legislature would not need to approve the resolution in joint session. He acknowledged that it could be cumbersome to require a joint session since one presiding officer could block the session. CHAIR HOLLAND asked if the administration had any comments. 1:59:47 PM MIKE BARNHILL, Deputy Commissioner, Department of Revenue, Juneau, Alaska, responded that the administration has no opinion on Amendment 2. He related his understanding that for the legislature to approve an initiated tax under Amendment 2 would require a simple majority of 21 votes in the House and 11 votes in the Senate. 2:00:16 PM SENATOR KIEHL asked if the requirement to approve the resolution in joint session is removed, whether the legislature could choose to approve the resolution in joint session rather than in regular sessions. SENATOR MYERS suggested that Legislative Legal Services could confirm whether the legislature could do so. He said it seemed unlikely the legislature would call a joint session for any matter it is not required to do so. He said that joint sessions are used for specific purposes. 2:01:25 PM" SENATOR HUGHES asked Mr. Milks if the committee deleted the language "in joint session" whether it would give the legislature either option. 2:01:53 PM WILLIAM MILKS, Senior Assistant Attorney General, Legislation & Regulations Section, Civil Division, Department of Law, Juneau, Alaska, stated that the proposed bill includes the language "by a majority vote in joint session." If the committee removes that language, it will change the voting requirement since a majority vote in joint session differs from a majority vote of each body. He did not think the legislature could take a majority vote in joint session because it would be contrary to Amendment 2. He referred to page 2, lines 7 to 8 of Amendment 2, which reads, "to not take effect unless the legislature by resolution approves the initiated law before the adjournment of the next regular session." He said the legislative history would show the initial requirement for joint session was removed. As Mr. Barnhill stated, it would mean each House was acting by majority vote, he said. 2:04:08 PM SENATOR HUGHES asked for clarification whether the legislature would have the option to approve the resolution in joint session or in regular session under Amendment 2. MR. MILKS responded that because the legislature acts in each House by majority vote except for a few rare circumstances, there would be a question about the ability to take this action in a joint session. He highlighted that the Alaska Constitution indicates meeting and acting by a majority vote in joint session for approval of appointments. 2:05:34 PM SENATOR HUGHES acknowledged that politics could arise since each body may be controlled by different parties. Therefore, meeting in joint session rather than approving the resolution in each body could change the outcome. She asked the administration why the bill required a joint session for approval. MR. BARNHILL offered his view that the language represents parity in drafting with other provisions in the Alaska Constitution. 2:06:56 PM SENATOR KIEHL offered his view that it was unlikely the legislature could refer a resolution to a joint session under the Uniform Rules. He expressed concern that it would remove a governor's opportunity to convene a joint session. He highlighted that under Amendment 2, any committee chair could stop the resolution from being heard. He argued that having the joint session option would allow a governor to make the case that the people have voted and the resolution should be considered. The governor can convene a joint session. While SJR 7 has troubling components, this amendment will allow the governor the opportunity to put legislators on the record if they go against what the voters decide. He suggested that Amendment 2 is likely the wrong direction to go. 2:09:03 PM SENATOR MYERS recalled Senator Kiehl previously raised the issue that a committee chair could block the resolution. However, the legislature could use Rule 48 to discharge the resolution from committee, he said. He cautioned that if the legislature must approve the resolution in joint session, a presiding officer could block the joint session. He related his understanding that the governor could call the legislature into special session, but he was not aware that the governor could call the legislature into a joint session. SENATOR KIEHL referred to Article 3, Section 17, which read, "Whenever the governor considers it in the public interest, he may convene the legislature, either house or the two houses in joint session." SENATOR MYERS said he stands corrected. 2:10:30 PM CHAIR HOLLAND said he tended to favor the original language in the bill. SENATOR MYERS withdrew Amendment 2. 2:11:38 PM SENATOR KIEHL stated his objection to SJR 7. He offered his belief that SJR 7 was anti-democratic and anti-republican. In essence, SJR 7 does not provide a philosophy of government or a philosophy of how government should function. Instead, it would make any attempt to institute taxes more difficult. It is not a relationship between the people and the government representing them but a means to put something into the foundational document. He said he will object to moving SJR 7. 2:13:21 PM SENATOR HUGHES remarked that it is rare for taxes to go down, but it is common for them to go up over time. She offered her view that government doesn't produce its own wealth but it relies on the private sector to do so. She said she preferred to make it more difficult to institute taxes and add checks and balances. She expressed concern that Alaska's spending per capita is so high. She recalled that research has shown Alaska's spending per capita is higher than other states since the state provides services in rural Alaska. Although she has some little mixed feelings about SJR 7, she said she likes the checks and balances it provides. She acknowledged she is willing to make tough decisions so she is willing to move SJR 7 forward. 2:14:51 PM SENATOR SHOWER offered his view that the committee should carefully deliberate on constitutional amendments to avoid unintended consequences. While he doesn't want to limit the legislature's ability to do its job, he also recognizes the initiative process is cumbersome and expensive. He cited the legislature's inability to protect and provide the permanent fund dividend (PFD) in the past six years as an example of the legislature not following the people's will. He viewed SJR 7 as giving the people more voice in the process. He agreed that SJR 7 should be carefully vetted. He offered his support for SJR 7. 2:16:37 PM SENATOR MYERS referred to the Alaska Constitution's structure. He said that policy decisions are written in the Alaska Constitution, beginning with Article 1, which establishes the rights of the people. Articles 2 through 4 provide for government structure and the balance of powers. The remaining articles pertain to policy calls on taxation, managing natural resources, and education. He offered his view that occasionally constitutional amendments are needed to address policy changes. Ultimately, the policy call in SJR 7 identifies that perhaps government, in particular the legislature, has become too powerful and needs to be restrained a little. He characterized SJR 7 as relating to trust and whether the people trust the legislature. SJR 7 is one means of showing that the legislature is worthy of that trust, he said. 2:18:28 PM SENATOR SHOWER moved to report SJR 7, as amended, from committee with individual recommendations and attached fiscal note(s). SENATOR KIEHL maintained his objection. 2:18:43 PM A roll call vote was taken. Senators Myers, Hughes, Shower and Holland voted in favor of moving SJR 7, as amended, from committee and Senator Kiehl voted against it. Therefore, CSSJR 7(JUD) was reported from committee by a 4:1 vote.